Budget tax goal too ambitious, says ICPAK

ICPAK vice chairman, Julius Mwatu, said an assessment of the expenditure priorities contained in the 2016/2017 budget estimates has attracted several questions around the expenditure planning for the country.

The Institute of Certified Public Account of Kenya (ICPAK) has raised doubt about the government’s capacity to generate the revenues proposed in Kenya’s budget for the 2016/17 financial year.

ICPAK national chairman Fernandes Barasa says the intent of the budget statement was to expand tax revenues from the informal sector, which has been a hard nut to crack given the sector’s weak compliance.

The Kenya Revenue Authority targets to collect Sh1.5 trillion might be too optimistic, he said. “The revenue may not be realised because most of the targeted people or companies in the informal sector do not have PIN number which KRA solely relies on in pang taxes,” he said.

Barasa says KRA’s tax administration relies heavily on the availability of taxpayer information and a contingent source which in case of the informal sector may not be possible. He also said that Sh1.5 trillion, being 20.3 per cent of the country’s GDP, was beyond the government’s reach.

According to the Kenya National Bureau of Statistics (KNBS) Economic Survey 2016, over 85 per cent of the jobs generated in the economy lie in the informal sector.

ICPAK said the growth in national budget requires a focused assessment for realism and the ability of the country to raise the commensurate revenue to fund the budget and most importantly, the country’s ability to generate economic activity that will spur economic growth.

ICPAK vice chairman, Julius Mwatu, said an assessment of the expenditure priorities contained in the 2016/2017 budget estimates has attracted several questions around the expenditure planning for the country.

Mwatu said while recognising that the delivery of election promises is a key determinant of the legitimacy of a Government, it is critical that this is carefully moderated in order to manage the growth in expenditure.

“The growth in expenditure should also be evaluated against the absorption capacity for capital expenditure. Kenya’s budget is financed by both revenues collected locally as well as through debt,” Mwatu said.